Microsoft revamps Surface tablets to challenge Apple

Mon Sep 23, 2013 7:29pm EDT
 
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By Sinead Carew and Bill Rigby

NEW YORK/SEATTLE (Reuters) - Microsoft Corp unveiled faster, more powerful versions of its Surface tablet computer on Monday in an effort to boost poor sales of its flagship hardware product and mount a stronger challenge to Apple Inc's iPad.

The Surface is key to Microsoft's plan to reinvent itself as a devices and services company, but the revamp comes less than a year after it brought out its own computers for the first time and failed to put a dent in the market. It has racked up only $853 million in sales while generating a $900 million charge for unsold inventory.

At an event in New York, Microsoft unveiled two new machines and a range of accessories promising faster processing, better battery life and more apps.

The new Surface 2, which runs on a low-power chip designed by ARM Holdings Plc, starts at $449 for the 32 GB version, not including a snap-on keyboard starting at $120. That is slightly less than Apple's latest wifi-only 32GB iPad, which costs $599.

The new Surface Pro 2, which runs on an Intel Corp chip and is aimed more at the lightweight laptop market, starts at $899 for the 64 GB version, not including keyboard. Apple's cheapest 128 GB MacBook Air costs $999.

Initial reaction was tepid.

"I don't see much incentive for people to buy these devices. Yes, they are cheaper than the iPads, but is that enough reason?" said Jack Gold, a technology analyst at J. Gold Associates. "It seems like Microsoft is just maintaining the traditional PC mantra - keep upgrading the chip and hardware a little bit every year at a slightly lower price. I think they needed to do something that was innovative beyond the first generation, and I don't see that in these devices."

Microsoft shares were steady at $32.82 on Nasdaq, while Apple shares rose 4 percent after reporting strong sales of its new iPhone 5s and 5c models and offering a more optimistic financial forecast.   Continued...

 
Panos Panay, Microsoft Surface general manager, holds up the Microsoft Surface Pro 2 during the launch of their Surface 2 tablets in New York September 23, 2013. REUTERS/Shannon Stapleton